♦ Comparing the two big boys of plantation. In YTD 2010, the share price
performance of big-cap plantation stocks has been relatively dismal, compared to
the KLCI. Up to 5 Oct, the KLCI has risen 15.4% YTD, Sime Darby has fallen
5.5%, IOIC has risen 0.4% and KLK has risen 3.6%. While there have been
special circumstances surrounding the underperformance of Sime Darby, we
believe there is no reason for the underperformance of IOIC and KLK. This is due
to the fact that CPO prices have actually risen by 6% year-to-date and historically,
the share prices of IOIC and KLK have generally followed in tandem. We believe
that the share prices of these two big-cap stocks are due for a rerating on the
back of continued liquidity in the market and given our view that average CPO
prices are expected to be higher on a yoy comparison in 2011.
Plantation Sector Update : The Battle Of The Giants - IOIC vs KLK - 06/10/2010
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